EU leaders blame the euro crisis on American credit rating agencies

Tusk and Barroso: the crisis is all the fault of wicked capitalist speculators

When EU leaders start claiming that the debt crisis is a plot got up by the credit rating agencies, you realise that they are losing their grip on events.

In an unsettling press conference, the President of the European Commission, José Manuel Durrão Barroso, blamed Portugal’s financial crisis on the US credit rating agency, Moody’s, whose analysis he called “biased” and “speculative”.

The credit rating agencies are, apparently, tools of American imperialism. Anglo-Saxon speculators are conspiring against Europe.

Mr Barroso even seriously suggested that, in order to break the dominance of the big three American agencies – Moody’s, Standard & Poor’s and Fitch – Brussels might have to develop a rival agency of its own (as if anyone would believe a word it wrote).

Nor is Mr Barroso alone. In a timely reminder of why the British Conservatives were right to leave the EPP, the Polish prime minister, Donald Tusk, ranted Spartishly at Barroso's side: “Only a naive person could have expected rating agencies to change into angels and have nothing else on their minds but ways of helping Greece or another country in trouble. Nobody establishes a rating agency in order to help anybody”.

The truth, of course, is that credit rating agencies were too optimistic about the euro zone, too ready to believe the Eurocrats. Their belated return to reality poses a massive problem for Brussels. It’s not just that Portugal must now pay more to borrow. It’s that the European Central Bank has been accepting what would normally be called junk debt as collateral. As Allister Heath explains, it has to keep bending the rules in order to keep the system solvent. Once it becomes clear that Greece and Portugal are bankrupt, the bankruptcy of the ECB itself will be impossible to hide. The entire European monetary system rests on what is, by most definitions, a bad bank.

The response of the EUs leaders? To stick their fingers in their ears and hum Beethoven’s Ninth. To demand that some EU institution come up with a more cheerful set of statistics. To blame imaginary speculators. We have reached the bunker stage. The end cannot be far.